The FDI space in Europe remains dynamic. Less than five months from the entering into force of the EU FDI Regulation, and just two months since the European Commission asked the Member States to both strengthen and “vigorously” implement the tools available to them and, where appropriate, introduce new FDI screening mechanisms –on which we reported in our previous alert –the past week manifested a number of legislative activities across Europe.

In this blog, we consider the changes proposed or made to laws in Germany, Hungary, Poland and Austria. Overall, we observe a further tightening of the legislative field, lowering the intervention thresholds / filing requirements, while increasing the sectors covered.

Besides the jurisdictions covered in the following, a new FDI law was also proposed in the Czech Republic in April and will be discussed and debated in the Czech Parliament in the coming weeks – watch this space for further updates.


On 20 May 2020, the German government adopted an amendment to the Foreign Trade and Payments ordinance (“AWV”) that has a particular focus on, and will provide enhanced protection for, the health-care sector in direct response to the COVID-19 crisis. Under the amended rules, transactions involving non-EU investors will be notifiable on a mandatory basis in circumstances where more than 10% of share capital is acquired in a German company that, among other things, develops or manufactures vaccines, drugs, personal protective equipment (e.g. mouth-nose masks) or medical products for the treatment of highly infectious diseases (including respiratory equipment). For more details, please see our earlier blog.

Added to this, an amendment to the Foreign Trade and Payments Act (“AWG”) was adopted by the Federal Cabinet on 8 April 2020 and is currently subject to review in the German Parliament. The new AWG draft bill proposes four main changes:

  • “Critical technologies” will be introduced (and defined by a further amendment of the AWV). Acquisitions of 10% or more of the voting rights in German companies active in the defined technologies will be subject to mandatory filings in addition to the existing mandatory flings required for activities in “critical infrastructures”;
  • Introduction of a stand-still obligation for all mandatory filings (“gun-jumping” provision);
  • Introduction of criminal sanctions for a violation of the standstill obligation and for passing on “sensitive information” during the sales process; and
  • Lowering of the substantive test: in accordance with the EU FDI Regulation it will be sufficient to justify an intervention by the German government if the proposed transaction is likely to affect public order or security.

Further information on the proposed amendment to the AWG are set out in our earlier dedicated blog.


On 26 May 2020, a new – temporary – decree came into effect in Hungary that supplements existing FDI laws (in force since 2018) and provides additional protection to businesses operating in a wide range of sectors during the COVID-19 pandemic (the “Hungarian Decree”). Unless further extended, the decree will remain in force until 31 December 2020.

The list of sectors made subject to FDI review pursuant to the Hungarian Decree is extensive, such that almost all foreign investment will be subject to review during the current period. The sectors listed in the decree range from (i) manufacturing of medicines and medical devices, (ii) healthcare, (iii) defence; (iv) telecoms; (v) fuel production; (vi) power generation and distribution, to (vii) financial services; (viii) agriculture; (ix) food processing; (x) tourism (including hospitality and cafeteria services); (xi) construction and (xii) certain retail and wholesale activities.

Under the Hungarian Decree, investments in which non-EU/EEA investors will acquire an interest in a Hungarian company active in a specific sector (see below) will be notifiable where the following thresholds are met:

  • An acquisition exceeding 10% of share capital and a value of HUF 350 million (approx. EUR 1 million);
  • Acquisitions of 15%, 20% or 50% irrespective of the transaction value; and
  • Acquisitions of 25% involving more than one foreign investor.
  • In addition, investments in which an EU/EEA entity acquires a controlling interest in a Hungarian company will also be notifiable.

Transactions subject to the new rules will be unable to proceed until approval is obtained (i.e. an FDI filing will have suspensory effect), and a transaction will be deemed null and void if implemented and no approval can be obtained. Fines for failure to submit a required filing may equal up to twice the transaction value.


On 22 May 2020, the Polish government introduced draft new legislation to the Sejim (lower house of Parliament) that will amend existing FDI laws (in force since 2015) for the purposes of both (i) aligning Polish law on FDI with the categories and sectors laid down in the EU FDI Regulation and (ii) providing additional protections to Polish companies during the COVID-19 pandemic.

The proposed amendments to the FDI law in Poland – which are however strongly debated in parliament – significantly expand the companies and sectors that are subject to review, which now include, among others: (i) electricity generation, (ii) storage of fuel and gas and other energy related services and activities, (iii) telecoms, (iv) software development for strategic companies, (v) technology concerning data transmission, payment services and cloud services; (vi) medicines and pharmaceuticals, and (vii) food processing.

If the law is passed as currently drafted, investments in Polish companies active in said sectors will become subject to review where a foreign investor acquires significant influence over the target, meaning that transactions are notifiable in practice on the acquisition of a 20% and/or 40% interest in shares or voting rights, as well as potentially on the acquisition of a substantial share of profits or a purchase of the target’s assets. A materiality threshold also applies, such that the target must have an annual turnover of at least EUR 10 million in one or both of the two years preceding the transaction. In addition, it appears that all investments by foreigners in public companies and which exceed these thresholds are subject to review, irrespective of sector.

In addition, under the draft law, only a potential threat to public order, public security or public health is required for a transaction to be made subject to review and for the possible application of remedies and/or prohibition of the transaction. Similar to the German regime, criminal sanctions may apply where filing requirements are not complied with.


On 26 May 2020, the Austrian Minister for Economic Affairs presented an initial framework to the Ministerial Council (“Ministerrat”) for a draft FDI legislation to the Austrian government. The framework indicates that the draft will include the following elements:

  • A focus on sectors where foreign investments may pose a risk on public security and order (in particular critical infrastructure);
  • Introduction of a general thresholds for investments of 25% or more of voting rights acquired by a foreign investor;
  • A lower investment threshold of 10% applicable to sectors such as defence equipment and technologies; critical energy infrastructure; critical digital infrastructure (in particular 5G infrastructure); water; systems guaranteeing the data sovereignty of the Republic of Austria; and (until 31 December 2022 only) research and development in the fields of pharmaceuticals, vaccines, medical devices and personal protective equipment;, and
  • An exemption for direct investments in micro-enterprises (including follow-on (growth) financing).

The overall aim of this initiative is to align the Austrian FDI regime with the EU FDI Regulation and further clarify the existing FDI rules in Austria. The draft should be rendered no later than July 2020.


As illustrated by these and other recent developments, the level of scrutiny of transactions under FDI-related examinations is increasing significantly throughout the EU. The emergence of these tightening regimes raises deal complexities for many transactions, including acquisitions of minority participations. These developments may also impact transactions currently under negotiation as the new laws often take effect immediately.

Photo of Peter Camesasca Peter Camesasca

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in-…

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in- and outbound aspects of the Asia/Europe interface.

Peter’s experience includes cases under Articles 101, 102 and 106 TFEU, national and multijurisdictional merger and joint venture notifications (including FDI assessments), investigations by multiple enforcement authorities and global antitrust litigation and monopolization issues (including IP cross-over issues). In addition, he advises and litigates on horizontal and vertical cooperation issues, prepares and executes various compliance and dawn raid programs and participates in the installation of in-house training programs, and heads a vibrant private enforcement practice.

Peter has acted before the European Commission, the European courts, the German Bundeskartellamt, the UK Office of Fair Trading and the Competition and Markets Authority, the Belgian Competition Council, and various national courts.